Who has most of the wealth? Is it the 1%?

The research arm of the Swiss bank Credit Suisse publishes an annual Global Wealth Report. You can download copies of the report from here.

The report is about household wealth and contains comparative data for a number of different countries. Credit Suisse define household wealth as follows -

"Net worth, or "wealth," is defined as the value of financial assets plus real assets (principally housing) owned by households, minus their debts. This corresponds to the balance sheet that a household might draw up, listing the items which are owned, and their net value if sold. Private pension fund assets are included, but not entitlements to state pensions. Human capital is excluded altogether, along with assets and debts owned by the state (which cannot easily be assigned to individuals).

All the values are in US dollars


These are the mean and median wealth values for eleven countries.

Table 1

Note the big differences between the mean and median values.

The mean [aka arithmetic mean or average] values are calculated by adding the wealth of all the households in a country and then dividing by the number of households.

The median is the middle value in a ranked table of the wealth of that countries households. For example, the median wealth in the USA is $61,667. That means that half of US households have wealth of less than $61,667. That is a lot less than the median values for the UK, Canada and many others.

An Example of Mean v Median

The mean value of 31 in table 2 has been calculated by adding the five values together and dividing by 5.

The median value of 19 in table  has been calculated by ranking incomes from highest to lowest and then taking the value that is in the middle of the list.

Table 2

The mean is distorted by the first value in the table. The mean wealth value for the USA is distorted by the wealth of its billionaires.

If we return to the household wealth figures calculated by Credit Suisse and sort the list by average household wealth [table 3] Switzerland is first and India eleventh. The USA is third.

Table 3

If we sort the list by median household wealth [table 4] Australia is first and India eleventh. The USA is seventh. Though the average wealth in the USA is 403,974 the median household wealth is only 61,667.

Canada has a lower mean than the USA but has a much higher median of 106,342 [not so many billionaires].

Table 4

Inequality causes the differences between mean and median wealth. If a country has some very, very rich people and lots of relatively poor people [e.g. the USA] then there will be a big difference between the mean and median values for wealth. In table 5 the countries have been ranked according to the ratio between mean and median [mean/median]. That puts Australia in the top position and the USA in tenth position.

Table5

The BBC website has an article about the wealth of the 1% in different countries. It has the following two charts.

The article provides an interpretation of the values in the charts. For example, the first chart shows that the French think that the 1% own 56% of the national wealth when they actually own 23%.

The second chart appears to show that the French think that their 1% should own no more than 27%. Does that mean that they think that the 1% should be increasing their  share of national wealth?

The article suggests that "that’s the completely wrong interpretation. ....what they’re really saying is that the very wealthy should have about half what they currently have." That would be about 12% of French national wealth.